Day Trading Tips
The Day Trading Tips Series Part 1: Economic Announcements
Is day trading similar to driving a car on a road?
How can day trading tips be related to driving a car? Think of it like this: when you learned to drive, did you jump into the car and just go? Were you aware of your surroundings? Did you notice the road signs all around you? What about the traffic lights? Let’s assume you knew how to start the car and drive it, but didn’t know where the stop signs and red lights were? What a disaster that would’ve been if you had taken the car out on the road with other cars completely unaware of where those signs and lights were located! How many people would say that you were gambling?
So what day trading tips can I relate to road signs and traffic lights? Market economic data announcements. These announcements are scheduled in advance for all participants to know when they will be announced, just like a stop sign. Some of these events can be market moving at times, but are you aware of them? Trading equities and futures markets without knowing when these announcements are released is the equivalent to driving a car on a road and not knowing where the stop signs and red lights are located.
Some of the main announcements include (but are not limited to):
1.) Non-Farm Employment Change and the official Unemployment Rate are listed on the first Friday of every month at 8:30 in the am. The Non-Farm Employment Change is the amount of jobs created or lost during the previous month. The Unemployment Rate pertains to how many people not employed but are actually seeking employment for the previous month. It is expressed in a percentage such as 10%. This is generally market moving.
2.) FOMC, also known as the Interest Rate Statement, is announced every six weeks, usually on a Tuesday or Wednesday. This is when the Federal Reserve Bank, currently headed by Ben Bernanke, announces the current interest rates and presents or hints at its future actions. Not being aware of this announcement is the equivalent to running a red light at a very busy intersection, it could end very badly for you. Day Trading Tip Alert: Don’t be on the wrong side of a trade during this announcement. Day trading the initial market moves after the announcement can end day trading careers. Best to sit the announcement out and leave it for the gamblers and professionals.
3.) ISM Manufacturing PMI, also known as the Institute for Supply Management manufacturing Purchasing Manager’s Index. This is released on the first business day of every month. It is another market moving announcement that is a leading indicator for future economic health. Released at 10am.
4.) Existing Home Sales are released about 23 days after the month ends. This measures future economic growth as well. Home sale transactions like this cause money to move and people to get paid.
5.) PPI measures producer costs. This is an indicator of inflation and is usually released 17 days after the first day of the month.
There are many other economic announcements that are released each month and in some cases every week, such as the oil inventories. I cannot emphasize enough that you should know when these occur.
If you don’t know when these announcements occur, it is the same as not knowing where stop signs and red lights are located when you are driving. So don’t ignore one of the most important day trading tips: Know when the economic data announcements are, and treat them like stop signs and red lights. (You also need to take the time to learn what each of these economic indicators means; this is for your own educational benefit.)
